Written by Patrick Smith*
Crashing through glass ceilings, let alone ones with reinforced steel, doesn’t often happen in Geneva – the velvet-lined headquarters of the international system in Europe.
‘Chapeau’ to Nigeria’s Ngozi Okonjo-Iweala, as the well-watered burghers and bankers of this lakeside city would say.
As the first woman and first African to win the director general post of the of the 164-member World Trade Organisation (WTO) after navigating the body’s opaque electoral processes, Okonjo-Iweala will start work with a quotient of respect.
Like Napoleon’s more successful generals, she was also lucky.
Back in November, then US president Donald Trump had ordered his trade envoy Robert Lighthizer to block her appointment – despite her winning support from more than 70% of the WTO members.
Then Joe Biden defeated Trump in the US elections, triggering several foreign-policy about-turns – among them was to give “strong support” to Okonjo-Iweala. And at 15.00 Geneva time on 15 February, the WTO held its general council online to confirm the new director general.
Okonjo-Iweala is expected at the organisation’s forbidding grey-stone headquarters this week, say diplomats in Geneva. After that, she embarks on the task of reforming, perhaps reimagining, the WTO for the pandemic and post-pandemic era.
“Passionate about trade”
When The Africa Report asked Okonjo-Iweala last year why she was campaigning for what was widely seen as the job from hell, she smiled quickly and clicked back into her stride: “Because I’m really passionate about trade.”
Detecting our scepticism that the arcana of multilateral trade deals could ever fire up the emotions, she added: “Trade is not an end in itself, it’s a means to an end […] an instrument that helps deliver development so that those who have been marginalised can be brought in.”
That explains Trump and Lighthizer’s opposition to her. Their view of trade is mercantilist: maximise exports, minimise imports in the cause of economic nationalism.
Okonjo-Iweala sees trade as motor for growth, development and raising living standards, which she points out was in the original remit of the WTO. That has long been relegated behind battles over commercial dispute resolution and geopolitical rivalries between China and the United States.
Those rivalries surface in the myriad issues locked in the WTO’s trade disputes settlement system but also in a battle about ‘values’ in the organisation. The US, along with the European Union, Japan, Brazil and pro-West powers argue for the primacy of market forces and trade-policy convergence – ideas they see as inconsistent with China’s economic system.
Since it joined the WTO in 2001, China has rejected the idea that its economic system, defined by many as state capitalism, should be a subject for scrutiny by the organisation. With economic nationalism in Washington and Beijing ballooning over the past five years, the stand-off in the WTO looks more intractable than ever.
On the genteel campaign trail in Geneva, Okonjo-Iweala walked the fine line between the two. She argued that the WTO should not exclude any economic system but rather look at how different economic systems create trade distortions and how the organisation could update its rule book.
“The principles of stability, predictability, non-discrimination, fairness, transparency – these are all the important principles on which the WTO and the world trading system was founded,” Okonjo-Iweala told The Africa Report last year. “It delivered, it stopped all the trade wars and it can deliver again.”
Turning that into policy as WTO director general, will be much harder as Dirk Willem te Velde, a trade expert at the Overseas Development in London argues: “Amongst several global popularist moves, such as ‘Buy American’, the EU’s strategic autonomy approach to be launched this month and concerns over subsidised production in China, the director general will face an uphill battle to use discussions at the WTO to reinstate the importance of free trade.”
For Te Velde, promoting free trade as a way to address the health (trade in PPE, vaccines, through safe and resilience supply chains), and climate crises (inducing innovation and trade in green technology) would be a prime and ambitious way to make the WTO relevant in the new era.
That would also position it as an international body helping to lead a recovery from the pandemic-triggered recession. Arguments about whether trade is good or bad have been overtaken by events, says Te Velde.
Chances of resolving trade battles
All that will be tested at the WTO’s 12th ministerial conference, which is due this year. It will be an early indicator of Okonjo-Iweala’s chances of resolving the pitched battles between the members.
“The ministerial conference can keep the WTO on the global economic governance map,” says Te Velde, as well as “keep discussions ongoing on e-commerce and services, deliver on action on WTO declarations such as gender.”
Before the grander ambitions of steering a global recovery, the ministerial conference will have to produce a formula for updating WTO rules and unlocking the frozen dispute settlement mechanism.
First, Okonjo-Iweala and colleagues such as New Zealand diplomat David Walker, will have to develop some credible proposals with member states.
Will Okonjo-Iweala be able to persuade the US to end its boycott of the WTO’s appellate body which ajudicates trade disputes? Although US President Biden offered strong backing to Okonjo-Iweala, he will not be much more conciliatory on trade than his predecessor: whether towards China or Europe.
Before the Ministerial Conference, Okonjo-Iweala could score a quick win by concluding WTO negotiations over fisheries. In July she told the New Zealand delegation that the negotiations over fishing grounds and subsidies have been progressing “relatively well”. A success there would encourage members to reach agreement on still more contentious issues, she said.
Fishing subsidies and the devastation to national fishing grounds by fleets of foreign industrial trawlers is an urgent concern for African economies, especially those along the western seaboard.
“Coalitions and alliances”
A senior African diplomat in Geneva told us that there were high expectations that Okonjo-Iweala would help start the dismantling the system of rich country agricultural subsidies which have weighed heavily on so many farmers and exporters in the region.
“It is a matter of coalitions and alliances,” he said, “… already we are having positive discussions with Australia on how to reform the subsidy system. This with public health and climate change are firmly on the WTO agenda now.”
Yet Dr Ismail Lagardien, a former World Bank economist writing in South Africa’s Business Day was less sanguine about Okonjo-Iweala’s agenda: “To be absolutely clear: Okonjo-Iweala will head the WTO with the blessing of the US and the EU. It is not clear whether she received the blessing of the African Union or any of the mangled mess that is Africa’s regional organisations…”
“She will not represent Africa’s agenda, as some may expect, as she has to preside over the global trade regime and changing the WTO would be unimaginably difficult within one four-year term.”
This pessimism isn’t shared by African diplomats in Geneva or by trade specialists such as Te Velde who told us: “Okonjo-Iweala will also have a keen interest in African prospects.” There would have to be more focus on the economic cost of the pandemic to Africa.
Apart from being unable to afford the lavish stimulus programmes in western economies and being at the back of the vaccination queue, Africa’s economies were, he said:
“… at the receiving end of global protectionism, trade wars and buy local campaigns.”
One of the first conferences over which director-general Okonjo-Iweala is set to preside is the Aid for Trade stocktaking event in March which is to discuss the effect of the pandemic on developing economies. It will be, says Te Velde: “… an opportune moment to support a step-up in Aid for Trade for the poorest countries to ensure that trade can help speed up their recovery.”
It might also be one of those rare occasions when the gladiators from the world’s two biggest economies can find some common ground on trade: how to finance it and make it work better in developing economies.
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*Editor in Chief of The Africa Report.
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